Today's featured Cannabis Investor is Ross O'Brien The Cannabis Investor Series Sponsored by TWO12 is back for the Fourth year. This year, the Series will feature eighteen of the cannabis industry's top investors, reviewing the previous 12-months and sharing their 2022 investment strategies. On today's episode Dan Humiston is joined by Ross O'Brien the Founder and CEO of Bonaventure Equity Produced by PodConX TWO12 - https://www.two12.co/ Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital Dan Humiston - https://podconx.com/guests/dan-humiston Ross O'Brien - https://podconx.com/guests/ross-obrien Bonaventure Equity - https://www.bvequity.com/
Today's featured Cannabis Investor is Ross O'Brien
The Cannabis Investor Series Sponsored by TWO12 is back for the Fourth year. This year, the Series will feature eighteen of the cannabis industry's top investors, reviewing the previous 12-months and sharing their 2022 investment strategies. On today's episode Dan Humiston is joined by Ross O'Brien the Founder and CEO of Bonaventure Equity
TWO12 - https://www.two12.co/
Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Ross O'Brien - https://podconx.com/guests/ross-obrien
Bonaventure Equity - https://www.bvequity.com/
RC CI4 Bonaventure
Dan Humiston: [00:00:00] Today and MJ bulls. We are continuing this year's cannabis investor series sponsored by two 12 with the founder and CEO of Bonaventure equity, the author of cannabis, capital, the book and the co-host of cannabis capital, the podcast, Ross. O'Brien welcome back to the show.
Ross O'Brien: thanks, Dan. Always great to be here.
Dan Humiston: Well, for our listeners who haven't heard. Cannabis capital the podcast. You start every episode with a really cool segment. And I thought, Ross, maybe you could explain to everybody what the cannabis economy challenges and how it ties to your business.
Ross O'Brien: Sure. Thanks, Dan, always great to be here on MJ bulls. I've loved doing this over the years. The, the inspiration for cannabis capital podcast was to be an extension of the book cannabis capital, and go into more of a long form conversation to help invite people into, the virtual rooms and the boardrooms, and some of the more detailed.
Nuanced conversations that we're having [00:01:00] around investing in cannabis. There's a concept that I identified in the book that we call the cannabis economy. And so what that is for people are new to it. We look at cannabis as a global macro economy, not a specific industry. And with any global macro economy, there are sub sectors and sub industries that develop. And we have a specific focus to invest in healthcare in the cannabis economy. So that puts us right in that, emerging industry of, of healthcare impacted by cannabis. So it's our belief that cannabis has reached the boardroom of every company in every industry period. And so we have a challenge and anybody can take it at cannabis, capital podcast.com and submit something to a, to Maggie. And I'm a cohost. And the idea is, is that we have yet to find an incumbent industry or vertical that has. Already seen or we'll have to adapt [00:02:00] or make adjustments and be informed by cannabis legalization, right? Everything from, drug testing, employees to, religion. We talked about that in one of the podcasts, that really reinforces that cannabis economy.
Dan Humiston: Yeah, it's super cool. And it really forces you to think , which is, the best part about it. Well, the other thing you do on your podcast is you've interviewed a lot of your portfolio companies and, during these interviews, It's been clear to me that you have a solid rapport with these guys.
And I think it has to do with the fact that you just don't provide capital. You also roll up your sleeves and provide guidance. Why is that so important?
Ross O'Brien: Well, thanks for that question. And I think it's a great question and it's really germane to our DNA as a firm and what I believe are the fundamentals of investing in cannabis. So there's a great quote, as one of the episodes of don't confuse a bull market with. Or don't confuse brains with a bull market, or however you want to say it is clear to us [00:03:00] that venture capital is a discipline and it's a discipline that's developed over decades of experience.
And in my case, and with our firm, I actually just wrote a blog post on this at Ross O'Brian VC. Ian talking about what are those core fundamentals and what they all speak to Dan is experienced and experienced matters. There's some research that I linked to on it that there are better outcomes with VC firms that have actual operational experience in their managing. And, quite simply we're investing in startup companies. We are operators ourselves. And I believe because this is such a high risk, high reward investment strategy, you should be investing in something that you have an intimate knowledge and experience with. Right? So if you're investing in startups, you should have been around the startup world for several cycles to kind of build that muscle memory.
And so our firms very much operationally. we know [00:04:00] that from our own experiences, starting and managing early stage companies is hard. If it was easy, everybody would do it. And there's extremely high failure rates as a result of that. We've done a lot of experience in healthcare. So it's easily translatable to our investment thesis today.
And because we are operators and having been on the other side of the equation, a we have a lot of empathy for the entrepreneurs. We talk a lot about, this concept of. You don't have money in the bank, but you gotta make a payroll on a Friday and we've experienced that. And a lot of our founders have experienced that, but allows us to.
More empathetic conversation and understanding about the challenges that are coming because they are coming right with every smaller stage company. There's always going to be challenges. So for us, it was never about just spray and pray and try to get some money out there and kind of rush into these transactions, but rather take the discipline of investing in early stage companies translate it to this market that we believe in. And apply , those fundamentals and best practices. And what that means for us is that the capital , is [00:05:00] one piece of the equation. It's a rapport and it's an it's building the right relationships with the founders. And that goes two ways. We bring ourselves to the equation as well, and we're not the right fit for everyone, but we're not supposed to be.
For the entrepreneurs that we are a right fit for we can build really great collaborative relationships. I've got a couple of the boards that I'm on now. We have an operations team that helps with back office support. We've just kind of been through it before and we want to, feel the team that has some veteran experience that allows these entrepreneurs to do what they do best.
And in our case, a lot of that is engineering, new science, engineering, new innovations, pioneering new, chemistry. , and if those management teams can do that better, stronger, faster, no, that's our job. Right. And capital's only one part of that equation.
Dan Humiston: I I'm smiling because you said not everybody's a good fit and I'm one of your podcast episodes. You made it a point is it advice to entrepreneurs? Do your homework look up. And find out what these investors invest in and [00:06:00] what stages they invest in. And I was listening to the show and I have to admit as an entrepreneur, sometimes, you put the cart in front of the horse.
You don't always listen to everything. You're just moving, moving, moving. You mentioned already, you touched on it, that you focus on the health care sector or the biotech sector can you elaborate a little bit more? Less people make that mistake when they reach out to you.
Ross O'Brien: Yeah.
And look at it. It's on one hand, just explaining like some of the things that we worked through on a daily basis, but on the other hand, why did I write a book? Why are we doing a podcast or, I mean, we're investors, right? Those things are nice to have not need to have the table.
Stakes is understanding how to do venture. It's very important for us though, because one of our core tenants is affirm is just continual learning dynamics thinking, there's no destination, it's always improving. And because of that, we're very committed to putting this type of information out in service of the entrepreneurs.
So what does that all mean? As it relates to our [00:07:00] investment thesis of healthcare biotech. Innovation, IP, I would summarize it very simply that when we looked at this space and applied our specific lens to successes, we've had investing in early stage companies and other sectors. The one thing that stood out was that innovation and cannabis was largely being held back by a piece of legendary.
So there was just one gating item to, to going in and learning about this and doing the science, like, like, imagine if like math was illegal for the last a hundred years. And then all of a sudden you're like, great. We can go do math now. Right. That's kind of how we thought about it. ,
when we look at what all the potential is in this treasure trove , of scientific innovation, that's been locked up in this illegal plant for so long. It's hard for us to talk ourselves out of just being on the very tip of the iceberg of an [00:08:00] absolutely transformative situation for delivering healthcare and patient outcomes in our communities and in our culture.
Dan Humiston: That's why you're in that sector. And so when somebody says, Hey, I have this great idea. And you're like, yeah, but it's not area where reinvest You can't be something for everybody. And I give you guys a lot of credit because you found your spot and you're focused on it.
Ross O'Brien: Yeah, thanks. I mean, look, we've invested , in businesses that fall out of that, sort of early on. And, and our first fund is a lot of my money, the capital and put it in the first fund. And we were, really trying to find the types of entrepreneurs that we were interested in.
And now the, the market developed in front of us in a way that allowed us to take the next step and, even tighten up the aperture of our investment thesis. But for us, We had several conversations with our limited partners and other investors early on saying, look, we need to put some blinders on here.
My biggest concern, Dan was this irrational exuberance particularly in the retail investor market [00:09:00] of just rushing in and realizing that so many people, when they hear the word cannabis, they think of retail, they think of CBD. They think of cultivation, they think of brands and that's great.
Those are all things that are happening in a mature or developing economy. For us, we need venture returns for us. We are healthcare investors and operators historically. So it.
was a perfect overlap.
Dan Humiston: Yeah, that makes a lot of sense. I understand that you're investing in your second fund. Where are you at this point?
Ross O'Brien: Yeah, excited to share Dan that we just turn the corner on the first close of our second fund. So we're now investing out of fund two. We have our first investment we're concluding out of that portfolio.
and we've launched the second fund with this more refined focus. And we will continue to raise additional capital. We're going to cap the fund at somewhere around 50 million. And ideally be making one to $3 million series seed series a investments in the companies that fit this healthcare [00:10:00] transformation that's happening as a result of cannabis legalization.
Dan Humiston: So there is still opportunity for people to invest. You haven't closed it.
Ross O'Brien: No, the fund isn't closed. We've closed our first commitments and we're deploying capital, but yes, for accredited investors, we're always happy to talk to people that are looking for, portfolio strategies , to go in. Like we're a great fit for people that understand that there is entrepreneurial upside in this space that, we are venture investors, and this is differentiated from a lot of the, a lot of the players out there.
This is series seed series, a looking for massive valuation, development in a three to five-year time horizon which fits, , our focus. And look, what we learned early on with our partners was this. Space that's conducive to trying to just pick winners. And, if somebody is looking to have exposure to the early stage of innovation in healthcare, in cannabis, then , we've got some great partners and [00:11:00] obviously our portfolio strategy is going to track to that.
Dan Humiston: Perfect. Well, we'll have links to Bonaventure equity in the show notes. So if you're a company that's looking for growth funding in that sector, or you're an investor that wants Bonaventure to manage your cannabis investments, just click the links in the show notes, or go to pod connect.com Ross.
Before we go, maybe you can recommend a good book.
Ross O'Brien: Obviously Dan you're teeing me up for my tagline, which did I tell you? I wrote it. Cannabis capital. You can find it on Amazon. Overall good books are sold. Literally get to save for the first time in my life. No pride in authorship. I've had a lot of great conversations with people that have found me on social media and things that have had some feedback from reading the book.
it seems to be doing well.
So, very excited,
Dan Humiston: It's good. And I'm glad you were able to do the show with us. Thanks for being here.
Ross O'Brien: always a pleasure, Dan, I appreciate everything.